2015-08-28

China Opens Real Estate Market to Foreigners

Buying financial assets and property is now easier than ever, right at the moment most people want nothing to do with China, including wealthy Chinese. A great moment for contrarian investors is coming.

While some countries are starting to put the brakes on the onslaught of foreign property investors, China is doing the opposite.

Beijing’s latest move to loosen restrictions for foreign investors and homebuyers in the Chinese property market could draw some attention to the lackluster sector, but it’s unlikely to help the country regain its crown as an investors’ darling.

The key factor driving both policies is Chinese home buyers.

China is easing foreign-exchange restrictions placed on foreign companies and individuals when they apply for loans and when they need to change yuan proceeds gained from the sale of a property, said a circular jointly issued by six government bodies, including the housing ministry, the trade ministry, the central bank and the foreign-exchange regulator.

It is also providing foreigners the same rights as locals on purchases of multiple homes, depending on each city’s purchase policies, according to the circular, which is dated Aug. 19 but was published Thursday.

The earlier rules on restricting foreign participation in the domestic property market are no longer relevant in the current environment, as China struggles to cope with its worst economic slowdown in decades. Concerns about capital flight, given the surprise yuan devaluation earlier this month, have also compelled policymakers to make policy U-turns.

The bottom isn't in for Chinese property and yields are still terrible in many cities (witness the implosion of SOHO China's stock), but there may soon be the chance to purchase currency depreciated property at great prices.